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Washington stores and growers contemplate costs of medical marijuana integration

By Sue Vorenberg
Cannabis Daily Record

Jim Mullen, COO of The Herbery, a small upscale chain of retail cannabis shops in Vancouver, Washington, scrunched his forehead as he contemplated the costs of adding services for medical marijuana patients to his line of store offerings.

(Cedar Creek Cannabis already sells one medical-grade product at The Herbery, even though the state the medical and recreational systems have yet to merge)

(Cedar Creek Cannabis already sells one medical-grade product at The Herbery, even though the state the medical and recreational systems have yet to merge)

It’s not that he doesn’t want to serve medical patients – he does, and will through at least one of his stores. But he added that there’s more to the equation than just opening up a new register or adding a few items to the shelves.

“It’ll cost us at least a few thousand dollars to get everyone trained, with more costs as we get everything set up,” Mullen said. “And we don’t know how many medical marijuana patients we’ll serve after doing that. But in the end you have to think, are we doing this for the community even if it costs us more as a business? We are at The Herbery, but I think we may only start off at one store until we see how it works out.”

Some patients may not bother signing up at shops because of backlash against the state registry, in which the state will keep a running list of patient names, Mullen said. And that makes estimating the number of patients that will use the system difficult.

“A lot of people just don’t like the idea of that database,” Mullen said. “And we wonder if it’s going to keep so many people away that we won’t actually see many patients in here. But, that said, we want to be community minded. And we need to do something to help patients that need to be in the system.”

Morgan Hutchinson, co-owner of High End Market Place in Vancouver, said her small boutique shop also plans on serving medical marijuana patients after Washington’s medical and recreational systems merge on July 1.

But she’s also looking at the business costs of training.

To get medical consultant certification, each employee needs about $500 in training and an additional $95 application processing fee to the state. Each certified employee also has to have CPR training, which her business plans to do in house.

And to be a medical marijuana retailer, a store must have at least one certified budtender on site at all times, which means having at least two on staff every day to cover morning and evening shifts, and at least a few extra staff to cover weekend shifts.

(Mark Michaelson of Cedar Creek Cannabis)

(Mark Michaelson of Cedar Creek Cannabis)

It also means stores will likely have to pay those trained workers a bit more than their untrained ones.

At HEMP, Hutchinson and her partner Gareth Kautz are getting their certifications, and they also plan on certifying five to 10 other employees.

The Herbery, which has a larger staff, will likely need to train even more than that, Mullen said.

“We’ll also need to buy a camera and laminator to make cards for patients, set aside part of the store as a medical marijuana checkout area, add a separate point of sale system,” Mullen said.

Patients in the integrated system will sign up to get new cards and register with whichever store they chose as their provider – which means stores have to provide all of that infrastructure for them, he said.

Extra costs will also likely fall on growers and processors that want to provide medical products – which generally require more complex testing and care, said Mark Michaelson, owner of Cedar Creek Cannabis.

“Packaging is going to add a little to the cost because the labeling for those products will be more detailed,” Michaelson said. “And testing is going to be a huge thing. Right now, for recreational, it costs about $80 or $100 for us to test a five-pound lot. For medical, we’ve estimated it will cost us $680 to test a five-pound lot. And beyond that, right now there are only a few labs in the state that are even set up to test medical products.”

That said, Cedar Creek also plans to move forward with medical products, despite the extra costs, he said.

The company actually already sells one medical product at recreational shops – a full extract cannabis oil often used by cancer patients, which he said has sold surprisingly well.

But Michaelson also said he’d be surprised to see many Washington growers going fully into the medical space.

“The whole state is going to be a little weird for a while,” Michaelson said. “For us to go full med would be suicide. We’re going to do a small amount of medical, and we plan to see how it goes and see how the state system works itself out.”

Dave Rheins, executive director of the Marijuana Business Association, said for the most part, stores in Washington are enthusiastic about getting into medical marijuana, even with the extra costs. But it will probably take everyone a while to get used to the changes as medical and recreational combine.

“I think the costs are small considering the enormity of the market,” Rheins said. “I’ve heard folks are eager to get into the medical arena so they can talk more about the benefits of cannabis – since right now, stores are banned from talking about that.”

But he added that medical services may not fit every business type in Washington’s legal cannabis industry.

“As the market here grows and we get more variety of products, I think retailers will start moving more into certain niche areas – say a shop that specializes in topicals, or one that specializes in concentrates like dabs,” Rheins said. “Some of the largest recreational stores now, they’re big volume, and they are very focused on selling cheap weed in bulk without much customer service. Those types of stores, the Wal-Marts of weed, probably aren’t a good match for medical marijuana. But other shops, more specialized or boutique shops – it’s perfect for them.”

And for patients worried that they won’t be able to find retailers, Rheins said he’s not concerned. He expects patients to see more options, rather than less, as the market continues to evolve.

“In Washington, we still have less than one half of our allocated stores open,” Rheins said. “We’re still coming online in many ways. And we have yet to integrate recreational and medical. This is a new marketplace, but one that I think will grow very rapidly. And I also think the higher standards for medical will benefit recreational customers as well, and lead to higher standards for all cannabis in the state.”

 

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